VT Group Inc., the United States-based division of Britain’s VT Group, plans to acquire defense firms as part of its growth strategy in this country once the acquisition of its parent company by Babcock International is completed this summer, Dave Dacquino, the CEO of VT Group’s U.S. business, recently told sister publication Defense Daily.
Babcock, a $2.8 billion engineering services firm that is also based in the United Kingdom, said on Tuesday it has agreed to purchase VT Group for about $2 billion, a deal which would give it a sizeable presence in the U.S. defense market, as well as complementary capabilities in Britain. Dacquino’s VT Group Inc., had about $451 million in sales last year.
Babcock mainly serves government agencies and large companies operating in highly regulated markets. It operates in the defense, nuclear, power generation and transmission markets.
VT Group is a $1.7 billion professional engineering and services support firm operating in three divisions: Defence, Government and Critical Services, and VT Group Inc.
The companies said their combination will better position them to take advantage of the trend toward contracts that are becoming larger and more complex.
In the United States, VT Group Inc.’s business is in three major areas, Dacquino said. These are logistics and readiness services, C4I, and base operations work. Logistics and readiness capabilities range from program office support to analysis of Army rotary wing aircraft maintenance needs, he said. Here, VT’s key customers include the Army’s Communications Electronics Command and Aviation and Missile Command.
In the C4I realm, VT’s customers include the Naval Space and Warfare Command’s Charleston, S.C., division, with work on submarine and surface ship communications and other systems, Dacquino said.
As for base support, work ranges from maintaining cranes and other equipment to electrical and heating, ventilation, and air conditioning systems, Dacquino said. Three customers here include the Navy’s Kings Bay, Ga., nuclear submarine base, the Army’s Fort Huachuca, Ariz., and NASA’s Wallops Island, Va., rocket facility.
Dacquino is looking for acquisitions that can boost VT’s abilities in training, C4 and information technology, and logistics and readiness. Sophisticated training provided by contractors is big in the United Kingdom and Dacquino believes demand is increasing for it within the Defense Department. The types of training include pilot, ground vehicles, C4I and maintenance, he said.
Dacquino took over VT’s U.S. operations last April and helped consolidate its three separate businesses here into VT Group Inc. In addition to acquisitive growth, organic growth will also be important, he said.
Babcock expects the deal to close by July. Afterward, VT’s U.S. arm will become Babcock International Inc.
Becoming part of Babcock will give VT Group Inc. access to a wider range of engineering talent as well as expertise on doing acquisitions, Dacquino said.
Babcock’s financial advisers on the deal were J.P. Morgan Cazenove and Evercore Partners. VT was advised by Rothschild.
Once the deal concludes, Babcock will join several other U.K. companies that have targeted the U.S. defense and government markets for acquisitions and growth, including BAE Systems, Cobham and Serco Group.